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Updated about 8 years ago, 12/18/2016
The Fed is the Devil
OK. I've never had a high aptitude for math. I even changed majors in college because minoring in math was not working for me.
Well, I'm sitting here trying to grasp the concept of the Fed raising interest rates over time. The Fed gradually raising rates is smart since the end consumer wouldn't complain as much on a .25 increase every quarter over a 2.00 increase all at once. Obviously it would hit the buy and hold market hard over time. Going over the numbers, I can only find one common denominator that will keep the cash-flow coming. INITIAL CAPITAL
When looking at the numbers for cash-flow, as interest rates increase, so should the initial capital (equity, down-payment)
In order to get the same cash-flow for a property, we would just need increase initial capital. Please correct me if I'm wrong in my assessment, but in an effort to keep the same cash-flow, should I increase my initial capital (equity, down payment) to stay in line with the rates increase? It's the only way I see to continue on this investing adventure. It's not a deal breaker. It's just a pain in my *** LOL
Below is an example I created; this is an extreme oversimplification, but here it is.